Human T-cell lymphotropic virus type I (HTLV-I) encodes a 40 kD nuclear transactivating phosphoprotein, Tax1. Through interaction with cellular transcription factors, Tax1 regulates the level of viral and cellular gene expression. To biochemically understand the mechanism of Tax1 transactivation, it is necessary to understand basal viral transcription. In addition, sequences which control basal HTLV-I transcription likely play an important role in initiation and maintenance of virus replication. A 45 nucleotide sequence, +195 to +240 (DRE 1), at the boundary of the R/U5 region of the long terminal repeat (LTR) is required for HTLV-I basal transcription. A partial cDNA clone from a Jurkat expression library, encoding a protein that binds specifically to the DRE 1 regulatory sequence, was identified. The partial cDNA encodes a protein which is homologous to the C-terminal 196 amino acids of the 36 kD transcription factor, YB-1. Cotransfection of a YB-1 expression plasmid increases HTLV-I basal transcription approximately 14-fold in Jurkat T-lymphocytes. The human T-lymphotropic virus type I (HTLV-I) promoter contains the structural features of a typical RNA polymerase II (pol II) template. HTLV-I transcription activity was reconstituted in vitro using TBP, TFIIA, rTFIIB, rTFIIE, rTFIIF, TFIIH and pol II. In HeLa whole cell extracts, however, the HTLV-I LTR also contains an overlapping transcription unit (OTU). HTLV-I OTU transcription was not inhibited by the presence of alpha-amanitin at concentrations which inhibited the adenovirus major late pol II promoter (6 ug/ml), but was inhibited when higher concentrations of alpha-amanitin were used (60 ug/ml). Neutralization and depletion experiments with three distinct pol II antibodies demonstrate that RNA pol II is not required for HTLV-I OTU transcription. Antibodies to basal transcription factors TBP and TFIIB, but not TFIIIC, inhibited HTLV-I OTU transcription. These observations suggest that the HTLV-I LTR contains overlapping promoters, a typical pol II promoter and a unique pol III promoter which requires a distinct set of transcription factors.